Case Law Details
Amg Sports Vs Principal Additional Director General (Madras High Court)
In a significant legal battle, Amg Sports, a partnership firm, contested a customs seizure memorandum and subsequent show cause notice issued under the Customs Act, 1962.
The crux of the matter revolved around the validity of the show cause notice dated 30.10.2023, which alleged misdeclaration of imported sports goods by Amg Sports. The petitioner argued that the notice lacked jurisdiction, as it was issued by the Commissioner of Customs rather than the designated proper officer under Section 28 of the Customs Act. Furthermore, Amg Sports contended that the notice was time-barred, exceeding the statutory limitation period.
A challenge to a show cause notice would ordinarily lie only if such show cause notice was issued without jurisdiction or if no case is made out even assuming that the allegations in the show cause notice are correct. This case does not fall within either of these categories. The petitioner has also not made out a case to interfere with such show cause notice for any other sufficient reason.
On the contrary, the respondents defended the notice, asserting that the Commissioner of Customs was rightfully empowered to issue such notices under Section 5 of the Customs Act. They emphasized that the extended limitation period invoked under sub-section 4 of Section 28 was justified due to alleged suppression of facts and misstatements.
The Madras High Court, in its detailed scrutiny, upheld the validity of the show cause notice. It affirmed that the Commissioner of Customs qualified as a “proper officer” under the Customs Act, thereby dismissing the petitioner’s jurisdictional objections. Additionally, the Court noted that the notice was issued within the prescribed limitation period, refuting the petitioner’s contention of being time-barred.
Regarding the look out notice issued against the managing partner of Amg Sports, the Court ruled that such challenges must be brought by the affected individual, not the partnership firm itself. The Court further rejected the writ petition on grounds of procedural delay (laches) concerning the earlier seizure memorandum dated 03.11.2021.
In conclusion, the Madras High Court’s decision in W.P.No.17464 of 2024 underscores the stringent adherence to procedural norms and statutory limitations in customs proceedings. The judgment affirms the authority of the Commissioner of Customs to issue show cause notices under specified circumstances and highlights the necessity for timely challenges against administrative actions.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
By this writ petition, a partnership firm assails the seizure memorandum dated 03.11.2021, show cause notice dated 30.10.2023 and a look out notice issued in respect of the managing partner of the partnership firm.
2. The petitioner firm was engaged in the business of importing sports goods. On the allegation that the said imported goods were mis declared, the seizure memorandum dated 03.11.2021 was issued. Subsequently, show cause notice dated 30.10.2023 was issued by invoking sub-section 4 of Section 28 of the Customs Act, 1962 (the “Customs Act”) and other applicable provisions. The present writ petition was filed in the said facts and circumstances.
3. Learned senior counsel for the petitioner contends that the show cause notice was issued without jurisdiction. He submits that only the proper officer is conferred with the power to initiate proceedings under Section 28, whereas the show cause notice has been issued by a person other than the proper officer. He further submits that the relevant goods were imported in the year 2019 and, therefore, the show cause notice is beyond the period of limitation prescribed in sub-section 1 of Section 28 of the Act. He also submits that the partnership firm is currently unable to carry on business, including on account of the look out notice issued to the managing partner. In these circumstances, he submits that interference with the show cause notice and look out notice is warranted.
4. Mr. V. Sundareswaran, learned senior standing counsel, accepts notice for the first and third respondents. Mr. H. Siddarth, learned junior standing counsel, accepts notice for the second and fourth respondents.
5. Mr. V. Sundareswaran submits that the show cause notice was issued by the Commissioner of Customs, who is entitled to issue a show cause notice as per the provisions of the Customs Act, including Section 5 thereof. He further submits that the petitioner had earlier filed W.P.No.5191 of 2022 in respect of one of the bills of entry and that no orders were issued in favour of the petitioner in such writ petition.
6. Mr. H. Siddarth asserts that the proper officer issued the show 4/8 cause notice and that reasons are set out for invoking the extended period of limitation under sub-section 4 of Section 28 of the Customs Act.
7. On examining the show cause notice, such show cause notice was issued under sub-section 4 of Section 28 r/w Section 124 and the Customs Act. It also appears that such show cause notice sets out reasons for invoking sub-section 4, including suppression of facts and wilful misstatement. Sub-section 34 of Section 2 of the Customs Act defines “Proper Officer” widely as meaning an officer of customs who is assigned specific functions under the Customs Act. The petitioner is unable to establish that the Commissioner of Customs does not qualify as a proper officer for purposes of initiating proceedings under sub-section 4 of Section 28 of the Customs Act. The show cause notice was issued on 30.10.2023, which prima facie appears to be within the 5 year period of limitation under sub-section 4 of Section 28. A challenge to a show cause notice would ordinarily lie only if such show cause notice was issued without jurisdiction or if no case is made out even assuming that the allegations in the show cause notice are correct. This case does not fall within either of these categories. The petitioner has also not made out a case to interfere with such show cause notice for any other sufficient reason.
8. As regards the look out notice, such look out notice should be challenged in accordance with law by a person to whom such look out notice was issued. This writ petition has been filed by the partnership firm and not by the individual to whom the look out notice was issued. The seizure memorandum was issued on 03.11.2021 and the challenge thereto is liable to be rejected on the ground of laches. For all these reasons, the Writ Petition is not sustainable.
9. Therefore, W.P.No.17464 of 2024 is dismissed without any order as to costs. Consequently, the connected miscellaneous petitions are also closed.
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